President Obama's team at the Department of Health and Human Services has a plan to prevent insurance companies from sending out politically toxic cancellation notices by making it easier for companies to modify existing plans without officially canceling them.
HHS unveiled the idea late Friday. "We propose that a modification made solely pursuant to applicable Federal or State law would be considered a modification of coverage rather than a product withdrawal," the draft regulation states. "These modifications could include changes required to comply with Affordable Care Act standards (such as elimination of a prohibited annual limit) and changes permitted based on updated standards (such as increasing an annual limitation on cost sharing based on the annual increase in the limit permitted as a result of the application of the premium adjustment percentage)."
The law allowed plans that were in effect when President Obama signed Obamacare to be "grandfathered" into the new system, but HHS regulations made it very difficult to retain that grandfathered status.
"Once a plan loses grandfathered status, it is subject to all of the other regulations within Obamacare, which is why so many Americans are losing their current coverage," Philip Klein explained in October.
The proposed rule would loosen those grandfathering requirements. "We believe these proposed standards will minimize unnecessary terminations of coverage, ensuring predictability and continuity for consumers, while reasonably providing issuers the flexibility to make necessary adjustments to coverage," the proposed regulation states.
It's not the first time that Democrats have tried to avoid the cancellation label -- Rep. Sander Levin, D-Mich., for instance, argued that the "so-called cancellation notices ... help people transition to a new policy" but it might be the most effective.
Politico Pulse predicted that the rule "would sharply limit health plan cancellations, just several months after a wave of canceled policies led to a political firestorm that put the White House on its heels."